Antam's sales fall on lower nickel output

Antam's sales fall on lower nickel output

Bloomberg, Jakarta

PT Aneka Tambang (Antam), a mining company 65 percent-owned by the government, said second-quarter sales fell 2 percent as a smelter breakdown cut nickel output.

Sales fell to Rp 714.62 billion (US$72.8 million) in the three months ended June 30, the company said in an e-mailed statement. Sales of ferronickel and nickel ore contributed 72 percent of revenue.

Production of ferronickel, a mixture of iron and nickel used to make stainless steel, fell 40 percent to 1,404 metric tons because of the shutdown. The smelter will restart in September, said the company.

"To offset the loss of production, Antam will increase its volume of toll smelting" with a third-party contractor, the statement said. "To offset lost revenues, Antam will boost high- grade nickel ore sales."

Higher nickel prices helped Antam offset the drop in production. Sales of the metal fetched $7.27 per pound on average in the quarter, 17 percent more than in the year-earlier quarter, the company said.

The firm also mines gold, which accounted for 23 percent of second-quarter sales, and bauxite.

Antam said it would spend about $5 million to repair its FeNi II smelter before it restarts in September to address safety concerns raised by abnormal metal levels and heat.

Construction of another smelter, FeNi III, is on schedule and the plant will start commercial production in the first quarter of 2006, the company said.

Antam produced 749,893 metric tons of nickel ore in the second quarter, 28 percent less than in the same period last year. It raised output of gold by 24 percent to 1,033 kilograms, silver production by 43 percent to 8,046 kilograms and output of bauxite by 6 percent to 358,914 tons.

The company had said on May 31 that it was considering bidding for 18.7 percent of the world's second-largest copper mine run by Freeport-McMoran Copper & Gold Inc., comprising 9.36 percent of the mine owned by PT Indocopper Investama and a 9.36 percent stake held by the government.

"Antam has decided to prioritize the acquisition of the government's stake in PT Freeport Indonesia, rather than the stake held by PT Indocopper Investama," Monday's statement said. "The acquisition of the government's stake appears more feasible than acquiring both stakes and is a unique opportunity for Antam."

Shares in Aneka Tambang were unchanged at Rp 2,425, 41 percent higher since the year started.